PROJECT SUMMARY/ABSTRACT For problematic large bone defects, such as those in the lower limbs, the use of bone autografts can lead to morbidity and pain at the donor site yet does not ensure healing. Substantial efforts have been made to generate bone graft substitutes that incorporate mesenchymal stem cells (MSCs) grown in vitro, providing the progenitor cells for new bone formation. Unexpectedly, the majority of culture-expanded cells contribute to bone formation indirectly, through paracrine effects on endogenous cells. This observation suggests that the paracrine mediators might be used in place of MSCs to achieve healing. Extracellular vesicles (EVs), including exosomes and larger microvesicles, are now understood to play important roles in both normal and pathological intercellular communication, transferring lipids, proteins, and nucleic acids from the parent cell to recipient cells. The protein and nucleic acid content of EVs have been shown to partially reflect the state of their parent cells, promoting the application of EVs as an alternative to direct cell therapy. Several recent studies have shown that EVs harvested from culture-expanded MSCs (MSC-EVs) induce pro-regenerative effects equivalent to direct MSC administration within a broad range of tissue injury models. If their EVs have similar effects within large bone defects, this might overcome some of the safety concerns and practical challenges associated with the directing implantation of MSCs. This project will investigate strategies for harnessing MSC-EVs to stimulate the repair of critical-sized bone defects (CSBDs) that do not heal without intervention. We hypothesize that MSCs can be manipulated in vitro to produce EVs with complementary, pro- regenerative signals that direct endogenous cells to complete one or more limiting steps in CSBD repair. The specific aims will focus on two critical repair steps for repair through an endochondral pathway. In Aim 1, we will characterize the vasculogenic activity of MSC-EVs. To enrich EVs for pro-vasculogenic factors, parent MSCs will be cultured under conditions mimicking the defect microenvironment (low oxygen and serum) prior to EV harvest. In Aim 2, we will determine how MSC chondrogenic differentiation influences the ability of their EVs to stimulate endochondral bone formation. For both aims, some parent MSCs will be genetically modified to increase VEGF (Aim 1) or BMP-2 (Aim 2) signaling by their harvested vesicles. EVs harvested under these conditions will be tested in well established in vitro assays for vasculogenesis and chondogenesis. They will be delivered to rat CSBDs using osmotic pumps, using vesicles tagged with a membrane-bound luciferase reporter to confirm defect delivery. These aims will establish proof-of-principle for an innovative approach to improve bone repair that avoids some important translational barriers associated with direct stem cell implantation.